One of the largest bills incurred when moving to a hybrid or fully cloud environment is your monthly cloud compute costs.

It can come as quite a shock when the costs begin to tot up over time. When there are advertised rates of (for example) 50 pence per hour for a medium sized VM, those compute instances you spun up, played with for a few minutes and then left powered on, can fast become a financial drain. Pay as You Go (PAYG) pricing stacks up very quickly.

Typically, PAYG is ideal in the short term or for development and test workloads. However, where the workload is steady state and is going to be resident for a long period of time – such as for infrastructure items such as Domain Controllers, Print Servers etc. – PAYG is not the most effective cost v use strategy.

Pre-purchase Compute

Both Microsoft and Amazon Web Services offer the ability to pre-purchase compute resources.  By committing to spend on compute resources over a longer period, discounts of approximately 50% can be achieved representing significant cost savings.

AWS Reserved Instances

AWS Reserved Instances allow anyone with an AWS account to pre-purchase compute resources so your compute is reserved and always available whenever required.

Reserved Instances have three payment plans – no upfront cost, partial upfront and all upfront. These plans are fairly self-explanatory and, in broad terms, the more you give AWS upfront, the more you save. A three-year plan paid all upfront represents the largest discount of between 40 to 50 per cent.

Example:  A t2.medium sized Windows Instance:

In the new AWS London region this would be charged at $0.07 per hour (AWS is billed in US Dollars), if you were using a PAYG model.

The cost of the same instance on a three year all upfront plan would reduce to $0.042 per hour – equating to a 41% saving on the PAYG approach.

This might not sound much but with dozens of instances, the savings soon become sizeable. AWS provide a Reserved Instances costings page as pricing differs according to the region and unit costs change on a regular basis.

Azure pre-payment plan

Pre-purchasing compute in Microsoft Azure is a little less clear cut. Whereas with AWS anyone with an account can purchase a Reserved Instance, currently only Microsoft customers with an Enterprise Agreement can pre-purchase compute resource.

The Azure compute pre-purchase plan promises savings of up to 63 per cent on standard PAYG rates.  Azure purchase options are also available from your reseller but even if the savings are broadly equivalent to AWS, again it represents solid savings over a longer period of time.

However there is only one pre-payment period available in Azure and that is for 12 months. This appears to be less flexible than AWS in the sense that you can only pre-purchase a specific instance family, size, region and operating system for the year.  AWS adjusted its offering to give some flexibility within Reserved Instances with its Convertible Instance plan. This allows you to use different instance families, operating systems, or tenancies over the Reserved Instance term for a slightly higher fee.

It can seem complicated but if a move to the cloud is on the cards and your plans include major infrastructure components then do consider using AWS Reserved Instances or Pre-Purchase Plan Azure Instances. You could save a serious amount of money!

By Chris Beckett, Technical Consultant, SystemsUp

SystemsUp can help create and implement the optimal roadmap to the cloud for your organisation.  To find out more please get in touch.



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